What’s the Difference Between a Buyer’s Market and a Seller’s Market?

There’s never been a better time to sell your Volusia County home. Why? Because we are at what appears to be a longstanding peak of a seller’s market. This is the inverse or opposite situation to what we experienced in the wake of the 2008 housing and economic crisis, at which point we were in what we call a buyer’s market.

Should You Buy or Sell? It Depends on the Market

So, what is the difference between a buyer’s and seller’s market? And, what does that distinction mean for you? First and foremost, if there’s any way you can help it, aim to buy during a buyer’s market and sell when a seller’s market is hot. 

While we understand that’s not always possible, the better you set yourself up to cruise in sync with the market the more equity you’ll gain and the better return on your real estate investments you’ll enjoy in the long run.

5 signs it’s a Seller’s Market

A seller’s market indicates homeowners are most likely to get top-dollar for their homes. This is the influx of dollars real estate investors hold out for.

From 2008 to 2012, real estate investors who snatched up homes for low prices rented them, typically at a profit (even renting at a loss can be beneficial on taxes via rental real estate loss allowances). Investors may or may not have fixed them up, and now they are unloading them like crazy to make the predicted returns they were hoping for. 

However, you don’t have to be a real estate agent or investor to capitalize on the ebb and flow of buyer’s and seller’s markets. You just need to learn how to recognize the signs and use them to guide real estate decisions.

1. There are more buyers than homes on the market

This is the basic economic principle of supply and demand. When the number of buyers outnumbers the quantity of homes for sale, it’s a sign we’re in a seller’s market. This is what you see houses sell for thousands or even tens of thousands of dollars over the asking price.

2. Prices are higher than ever

Whenever demand outpaces supply, the prices of a product go up. The housing market is no exception. While agonizing for younger homeowners or families who have worked hard to save for a down payment, housing prices in a seller’s market can seem overinflated. But, because you just never know how much the bubble will expand, many buyers are willing to take the risk and “buy high” out of fear that the market will continue its upwards trend for longer than they want to wait.

3. Buyers feel they have to sell themselves

In a seller’s market, offers are often accompanied by pictures of the newlyweds or families who hope to buy the home. Instead of handing over a plain stack of our industry’s boilerplate offer documents, your real estate agent may encourage you to write a personal letter stating why you love the home and feel “it’s the one” for you, in the hopes that pulling at the seller’s heartstrings will compel them to accept your offer.

When a buyer tries to sell their story, the sellers undoubtedly have the market’s upper hand.

4. Houses sell in a matter of days or weeks

In a seller’s market, homes that you see advertised on popular real estate platforms may already be in  “sales pending” status before you can tour the home. As a result, buyers may only need to host a single open house before they have a compelling offer worth accepting.

Or, in many cases, inside connections between real estate agents often lead to a closed sale before a house even enters the market or makes an appearance on an MLS-related website.

5. Sellers don’t offer incentives

In a seller’s market, you are far more likely to see a bidding war than to have a seller offer any incentives. While we always support sprucing up a home for a sale, a seller’s market may only require minor, cosmetic improvements, as opposed to the more elaborate upgrades agents might recommend in a buyer’s market. Similarly, sellers who don’t want to lift a finger can still make quite a bit of money on rundown fixer-uppers. 

When sellers reign supreme, they’re less likely to offer incentives like including high-end appliances, giving you a substantial credit for needed structural improvements, or offering to pay closing costs. The homeowners don’t need to because they are confident they’ll make what they need without any concessions or incentives needed.

These scenarios look quite different in a buyer’s market.

5 Signs It’s a Buyer’s Market

A buyer’s market is the upside-down version, or the opposite side, of the seller’s market.

1.  Buyers have their pick of dream homes

The inventory is so prolific that buyers can be as picky as they want to be. They are more likely to hold out for their dream, turnkey home because dozens of homes meet their criteria. It’s only a matter of time before they find the right one.

2. Prices are lower than ever

Woe to the seller forced to move their home in a buyer’s market. Unless they’ve been in the home long enough for accumulated equity to override the market and tip in their favor, odds are they are selling the home for less than they paid for it. Prices are at the bottom of the value range. Some homeowners may even find themselves in the dreaded situation of being upside down on their loans.

3. Inventory sits around for a while

In a seller’s market, homes may sell before they enter the market or within a matter of days. In a buyer’s market, sellers may find themselves with a house that lasts on the market for months rather than weeks. Then, they have to decide whether to move forward with the sale at a lower-than-hoped-for price or whether to rent the property instead.

4. The buyer can request credits or concessions

When you purchase a home in a buyer’s market, you have a better chance of getting things like a credit to replace the carpet or flooring, have your closing costs paid for, or the buyer may even throw in high-end fixtures or furnishings that are perfect for the home. 

5. Closing sales prices are lower than the asking price

Sadly for the homeowner, a buyer’s market is in full swing when closing sales prices are lower than the original asking price. You’ll notice more down-arrows appearing on online real estate ads to induce prospective buyers to act.

Are you planning to sell your home this year? Now’s the time to take advantage of our seller’s market. Find a qualified real estate agent and learn more about what you can do to leverage your position and sell your home at its optimal price point. 

The agents at Southern Exclusive Realty have served 400 clients and counting. We’re here to help you make your real estate dreams come true in both buyer’s and seller’s markets. Schedule a consultation, and let’s make the most of this window of opportunity.